Free trade denotes a state of international commercial relations premised on governments' restraint from using policy instruments meant to favor indigenous industries against foreign competitors. According to the conventional trade theory advocated by classical and neo-classical thinkers, free trade makes little economic sense failing nations' tendency to specialize based on comparative advantage, a concept with high persuasive influence despite the elapsing of time. Even though the comparative advantage rule has seldom been questioned per se, the free trade concept has been fiercely disputed and not infrequently, bashed. Nations' involvement in international trade often follows patterns that do not fit theoretical models but attempt to respond to circumstantial interests, most often the need to protect poorly competitive industries. In common parlance, free trade has had both proponents and enemies.
The relation between international trade and environmental and social issues has deep historical roots, having been manifest ever since the first industrial revolution. Ironically, the expansion of industrial activities marked, besides the exit from economic backwardness, the commencement of an inexorable war of men against nature. Concomitantly industrialization laid the groundwork for an explosive increase in international trade, which made the latter responsible for increasing environment degradation and social rights infringement. The removal of trade barriers in the first decades after the Second World War as well as the subsequent regulation induced by globalization rendered the bad effects of man’s activity upon nature even more conspicuous. Yet somewhat paradoxically, for all the harm inflicted upon the environment so far, international trade now seems to be an efficient vehicle by which dirty production still prevailing in many countries of the world could be curtailed. The paper is intended to explore, from historical perspective, how environmental issues have come to be entangled with international trade and how serious the problem is.
The formidable surge in the volume of international trade after 1960 stimulated surveys designed to ascertain to what degree the commercial flows among nations reflected the structure of their economies, in other words, how tight was the correlation between international exchanges and the specific attributes of participating nations. In fact, scholars were keen to test the relevance of the conventional Heckscher-Ohlin theory, that is, to what extent did nations’ exports reflect their endowment with factors of production, more specifically, whether their exports used their abundant factors intensively. I try to show that, although most of the tests reached their purpose in that they confirmed the conventional theory’s predictions, in certain cases such as Japan, whose economy is arguably idiosyncratic, factor specificity is more relevant than factor intensity in explaining, not only the country’s international specialization but also the premises of its uncanny 20th century ascendance to the top of the world economy.
In this paper I discuss two long disputed notions: that capitalism without crises is a fallacy respectively that capitalism bashing, however severe, will not endanger the system itself. Yet proving both is not an easy task since the capitalism issue has always been a cupellation of theory, ideology and political precepts, which are controversial and hard to disentangle. That capitalism detractors are numberless is a truism. Yet criticism against capitalism, however fierce, has always been clearly delineated. Not any more: globalization has rendered the picture dangerously fuzzy. It is now hard to ascertain whether someone who will harangue about the ostensible evils of globalization is also a declared anti-capitalist. The blend of capitalism and globalization seems to be pure dynamite.
In keeping with an already entrenched paradigm, international trade in tasks exerts upward pressure upon skilled workers' wages in both home and host countries. Yet certain empirical evidence from intra-European trade shows that sometimes things occur in reverse, that is high skilled workers' wages in home countries may decline as a result of offshoring, an outcome that looks like an inverse "maquiladora effect". I try to show that such deviations do not fly in the face of mainstream theory but rather, they reflect the different conditions under which offshoring is performed today as compared to the ones prevailing two decades ago.
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